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Commercial Analytics in Consumer Goods: Research Report
Moving from Insights to Action
Consumer packaged goods (CPG) companies devote considerable resources to using analytics and building analytic capability—analytics is now a multibillion dollar business and companies charge employees across their organizations with collecting and analyzing data. The overall expectation is that these investments in data and analytics will help companies make faster, better-informed decisions and take concrete actions to improve market performance.
However, as discussed in our recent report Moving from Insights to Action, many companies’ analytic efforts fall short of those goals. Why? The report found that considerable investment in analytics was wasted as companies:
1. Pursued non-standardized, fragmented analytic efforts across the enterprise
2. Focused more effort on data acquisition and management rather than conducting market-facing, predictive analytics that help increase sales and create value
3. Did not “operationalize” or embed consistent analytic capability, processes and evaluation mechanisms across the enterprise.
This state of affairs diminished companies’ ability to use analytics to extract shopper insights that would spur taking different action at the shelf to help increase sales. The Moving from Insights to Action report supported these findings with quantitative data and our frontline observations from helping companies develop and use analytics. As part of this research, in the summer of 2012 we surveyed over 75 large, global CPG companies about their analytic initiatives (see sidebar explaining research methodology). We explored five specific dimensions of how companies are using analytics:
1. Importance and value of analytics
2. Perceived analytic maturity
3. Analytic data and tools
4. Sponsorship and funding
5. Investment in analytics
The results show a lot of companies—despite beliefs to the contrary—are still at the beginning of their journey in developing and deploying analytics to improve their competitive position and deepen their understanding of and connection with consumers. Based upon Accenture’s experience and understanding of analytic capabilities we learned that many companies don’t accurately recognize what constitutes “leading practices” in analytics, believing their capabilities to be more advanced than they actually are.
Our key finding is that companies are using analytics more and more, but are far from capturing the value possible. To realize that value, companies could refocus analytic efforts, marshaling and deploying analytics to identify actions and uncover opportunities on the shelf level. With that focus, analytics can satisfy today’s discerning, value-conscious consumers.
Introduction
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Our goal in conducting the survey was to develop a clear picture of how CPG companies around the world were using analytics in their business and what type of value they were achieving as a result of their analytic capabilities. Our quantitative online survey of over 75 companies was conducted in May 2012. We targeted senior people (Director and above), and over 40 percent of respondents are or had been C-Suite members. All respondents had several years’ experience in the field of analytics and
over 80 percent had sole responsibility for commercial analytic activity in their respective companies.
We asked respondents several questions related to five areas:
1. Importance and value of analytics
2. Perceived analytic maturity
3. Analytic data and tools
4. Sponsorship and funding
5. Investment in analytics
As the profile below indicates, the participants’ companies operate globally (in more than 10 countries) and range in scale from diversified global leaders such as Kraft and Unilever, to companies with a smaller yet substantial footprint such as TsingTao and Perfetti. The companies participating were geographically diverse as well, located in EALA (48 percent), North America (35 percent) and APAC (17 percent).
Research Methodology
15%
39%
20%
$40 Billion or more
$10 Billion to $39.9 Billion
$5 Billion to $9.9 Billion
$2 Billion to $4.9 Billion
Global revenue in the past fiscal year
27%
General Merchandise
Food & Grocery
Health & Personal Care
41%
21%
16%
Alcohol & Beverage
Agri -Business
Foodservice
Apparel
Other
7%
7%
4%
3%
1%
3%
Germany
11%
15%
Russia
USA 35%
4%Japan
3%Brazil
France 9%
China 11%
Italy 11%
UK
23%
23%
27%
31%
39%
49%
52%
60%
23%
Mass Merchandising
Wholesale
Grocery / Food
C-StoreOnline—
your corporate websiteDrug
DIY
QVC/HSN channels
Online—3rd party website
Company Profile: The study included 75 global consumer goods companies with $2bn+ in annual sales.
Global revenue in the past fiscal year
Company Headquarters
Industry Sector
Channels company competes in
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Our findings show that use of analytics is widespread and growing, particularly in larger companies, yet a gap in executing value-creating analytic strategies persists.Most CPG survey respondents expect to maintain or increase investments in analytics next year, a testament to the strong perceived benefits of analytic capability.
An overwhelming 96 percent of companies, both large and mid-size, indicated analytics as “critical” or “very important” to achieving business objectives (figure 1). Further, although faced with constrained budgets nearly two in five (37 percent) respondents stated that their companies will be investing an incremental 10 percent or more in analytics in the upcoming fiscal year, with only a tiny percentage investing less (figure 2).
1. Investing in Analytics Continues, but Companies Struggle with Execution
4% 8% 3% 7% 3%
67%69%
61%77%
73%65%
29%23%
36%23% 20%
32%
North America
Overall $1 Billion to $4.9 Billion
APACEALA More than $5 Billion
Somewhat ImportantVery ImportantCritical
Region Size ($ Rev.).
9%Investing more than 20% more
Investing 10-20% more
Investing up to 10% more
Investing the same
Investing less
28%
33%
23%
7%
Figure 1: Growing Importance of Analytic Capability Q: How critical are analytic capabilities to achieving your company’s current business objectives?
Figure 2: Investments in Analytics Projected to Continue Q: To what degree is your organization shifting investments towards analytics over the next year?
Overall
Sales, finance and supply chain are usually the lead sponsors of analytic initiatives, although marketing fronts a disproportionate amount of funding (figure 3).
While many functions in a typical company use analytics, we found that the ‘quants’ in sales, finance and supply chain groups drive most initiatives. However, there also appears to be a disconnect between sponsorship and funding, as our survey found that marketing foots the bill more often than other functions do.
Most respondents (68 percent) perceive their companies as being analytic leaders (figure 4).
Even calibrating for self-reported ‘grade inflation’, this was somewhat surprising and doesn’t align with Accenture’s marketplace experience. So many companies self-identifying as leaders implies that companies are likely overestimating their commercial analytic capabilities or in some cases may not truly understand what “leading edge” is when it comes to commercial analytics, or both. Larger companies, as well as those in APAC, were more likely to characterize themselves as ‘leaders.”
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31%Sales
21%Finance
Sales Chain
Marketing
Strategy
20%
15%
13%
63%Sales
49%Finance
Sales Chain
Marketing
Strategy
53%
69%
35%
40%46% 42%
23%
53%
37%
60%54% 58%
77%
47%
63%
North America
Overall $1 Billion to $4.9 Billion
APACEALA More than $5 Billion
Proficient (on par with our competitors) Leader (ahead of our competitors)
Region Size ($ Rev.)
Figure 3: Sponsorship and Funding of Analytics What department is the primary sponsor of existing analytics initiatives in your company? Which areas of the organization are funding data and analytic initiatives?
Primary sponsor for existing analytics(single response items)
Funding analytic initiatives (multiple response items)
Figure 4: Most Companies Perceive Themselves as Analytic Leaders Q: Please describe your company’s current “analytic maturity”.
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Despite seeing themselves as analytic “leaders”, only 12 percent rate their ability to execute as “exceptional” (figure 5).
The lack of execution skills calls into question what exactly the perceived leaders are leading in. Companies may be equating quantity of analytic activity or investment and importance with quality or impact. While CPG companies are investing in building analytic capability across several areas, this is rarely done with a clear view on what drives value or with a perspective on how to sequence analytic initiatives for better impact. Those deficits most likely are perceived as a lack of execution by respondents.
Regardless of a company’s analytic capabilities, what is important is extracting analytic insights that allow companies to take action at the shelf. Without efficient and effective processes that spur action on analytic insights, the best analytics in the world cannot improve returns on investment or market performance.
1% 3% 2%
87% 92%81%
92% 87% 87%
12% 8% 17% 8% 13% 12%
North America
Overall $1 Billion to $4.9 Billion
APACEALA More than $5 Billion
Pockets across the organizationGoodExceptional
Region Size ($ Rev.)
Figure 5: Confident but Not Exceptional Execution in Analytics How would you rate your ability to execute effectively leveraging analytics?
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Companies view the primary benefit of analytics as supporting growth, yet much of the current analytic effort is focused on conducting retrospective financial analysis and managing the channel.
Companies see the primary benefit of analytics as driving growth vs. reducing costs, yet their actual analytic focus as financial and performance management rather than extracting shopper insights to grow share or the category.
Despite the fact that companies acknowledge the primary value of analytics as obtaining a better understanding of the shopper and how to optimize levers such as assortment, pricing and promotions, they continue to focus on the more “operational” aspects. This includes looking in the “rear view mirror” to understand how to manage the channel (figure 6). This approach may be rooted in history—generally speaking, this is how companies have always used the data, they already have the capabilities, and in many cases this is the best/only data available. In contrast, Accenture typically sees high performing businesses focusing on high value areas such as assortment, pricing and promotion.
2. Realigning Analytic Tools and Data to Create Value
23%
39%
40%
48%
51%
53%
55%
55%
60%
73%
5%
17%
26%
23%
32%
35%
41%
36%
29%
52%To measure cost to serve /
profitability (channel, customer and/or product)
To improve broker distributor management
To improve multi-channel interactions (digital/traditional
with customers/consumers)
To optimize return on investment (ROI)
To develop shopper-specificproducts and promotions
To improve portfolio, assortmentand space management
To leverage improvedshopper insights
To improve sales force size, structure and resource allocation
To improve pricingand promotions
To optimize in-store retailexecution activities
Figure 6: Current Uses of Commercial Analytics Q: In which of the following ways does your company use commercial analytics to manage your business?
Overall
Ranked within top three ways to manage the business using analytics(either 1, 2 or 3)
87
Companies are prioritizing descriptive analytics over more value-creating predictive capabilities.
Right now, the primary applications of analytics are. descriptive in nature (reporting on what has happened), with companies using analytics to gain more granular insight into financial and performance management (figure 6), rather than using predictive analytics (modeling what will happen) that can help optimize revenue in the future. This is at odds with companies’ aspiration to use analytics primarily to drive growth, as well as their characterization of themselves as analytic leaders. Companies recognize that not all analytics are created equal when it comes to growing the topline. Respondents identified analytics that improved sales force effectiveness as having particularly high impact across both revenue and cost drivers, and that using analytics to improve multi-channel interactions also generates greater revenue benefits from improved distribution/compliance, pricing and in-stock rate (figure 7).
To measure cost to serve / profitability (channel, custom
To improve multi-channel interactions (digital/traditiona
To improve salesforce size, structure and resource allocation
To improve pricing and promotions
To improve portfolio, assortment and space management
To develop shopper-specific products and promotions
To improve broker / distributor management
Reduced costs: decreased SG&A
Service: improved customer service through improved
planning execution
Increased revenue: improved distribution / compliance
Working capital: reduced inventory
Increased revenue:improved pricing
Increased revenue: improved return on investment
Increased revenue:improved in-stock rates
Reduced costs: decreased SG&A
Reduced costs:reduced buybacks
47%
52%
56%
65%
71%
35%
82%
47%
62%
41%
82%
61%
52%
67%
62%
What benefits have you seen?
In which of the following ways does your company use commercial analytics to manage your business?
Figure 7: Commercial Analytics: A Disparity between Use and Benefits Q: Which commercial analytic capabilities have a particularly high impact across benefit areas?
© Accenture 2012. All rights reserved.
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Despite the perceived benefits of analytics, the majority of companies appear not to be prioritizing analytic capabilities consistent with where Accenture typically sees the most value: to optimize price, improve returns on various promotion tactics, enhance assortment and retail execution, and more optimally allocate funds across brand marketing, trade marketing and shopper marketing. This confirms our earlier analysis, which suggested that companies
need to reorient their analytic efforts toward critical sales and marketing activities, as well as toward predictive uses. As indicated in Figure 8 and discussed in our report, many companies collect and manage far more data than they use for actual analysis, suggesting that energies spent in over-collection of data could be better deployed on deeper, forward-looking analysis.
External Structured
External Unstructured
Internal Structured
43%
43%
39%
43%
37%
47%
39%
45%
43%
Retailer Inventory
Distributor Shipment
Distributor Inventory
Social media direct
Store Audit / Retailer Inventory Report
Syndicated: Nielsen
Retailer Loyalty
Syndicated: MSA
Retailer Transaction Log
Syndicated: IRI
Retailer POS
Social Media Monitoring Data (e.g., Radian6)
43%
35%
53%
Website Metrics
39%
47%
41%
Campaign Response Data
Other Digital Data
Invoice
47%
35%
40%
Financial
Shipment
42%
51%
58%
44%
53%
46%
51%
49%
44%
43%
36%
33%
45%
47%
46%
41%
49%
53%
Data being collected Data being used
AnalyticsExtensive
Figure 8: Data Collection Outstrips Data Use
Overall
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A larger—or better—toolbox may be necessary as only 50 percent of respondents felt their companies have the right tools to meet analytic needs (figure 9).
We suspect that a large part of the challenge for companies is that the collection and management of mountains of data is extremely time-consuming and expensive, and detracts from their ability to invest in or deploy tools capable of predictive analytics. But, you don’t
use a screwdriver when you really need a hammer. Tools that efficiently collect and manage data to detect and identify the drivers of changing buying patterns are different from those designed for financial reporting. Thus, companies may need to consider investing in more tools and resources that can ferret out latent markets, channels and consumer segments.
By redeploying analytics to drive growth, companies could curtail extensive data collection and
management activities to do more analysis. Investing in an integrated technology platform that automates data collection and makes management easier is a good first step.
An integrated platform can also connect organizational silos of information that impede excellent decisions by providing one version of the truth for all functions to use in day-to-day decision making.
Region Size ($ Rev.)
49%
51%
56%
55%
62%
53%
42%
77%
44%
58%
38%
58%
42%
62%
53%
58%
33%
63%
20%
52%
40%
57%
53%
55%
$1 Billion to $4.9 Billion
More than $5 Billion
APAC
North America
EALA
Analytic Toolse.g., Predictive /
Prescriptive Analytics
Data Harmonization
Data Mgmt/Storage
Reporting Toolse.g., OLAP / Descriptive
Analysis
Figure 9: Companies See Need to Expand Analytic Toolset Q: Do you feel you have the right tools to meet your data management and analytic needs?
Results based on response: “Yes we do”
11
Companies are experimenting with ways to operationalize analytics throughout organizations and their business networks, although consistent team use of analytics varies widely.
Companies are moving toward centralizing analytics or organizing it as a shared service as well as relying on business process outsourcing providers to support analytics.
The organization and management of analytic capability is changing. A surprisingly high percentage (almost 80 percent) of companies reports having a centralized body to govern analytics. Of those that centralize,
two in five have set it up as an entity separate from any existing function. Across the board, over 84 percent of companies use some sort of a shared service model for analytics, split evenly between onshore and offshore models (figure 10).
3. Operationalizing Analytics throughout the Enterprise
Region Size ($ Rev.)
33%
35%
70%
65%
40%
33%
30%
50%
23%
43%
50%
67%
70%
50%
77%
70%
25%
33%
42%
67%
58%
69%
75%
35%
$1 Billion to $4.9 Billion
More than $5 Billion
APAC
North America
EALA
Analytic Toolse.g., Predictive /
Prescriptive Analytics
Data Harmonization
Data Mgmt/Storage
Reporting Toolse.g., OLAP / Descriptive
Analysis
Figure 10: Analytics Frequently Offered in Shared Service Model
12
With or without centralization, we found that a higher than expected percentage of CPG companies are outsourcing end-to-end processes related to analytics (see figure 11), particularly in areas such as data management (48 percent), applications (51 percent), reporting (47 percent) or analytics/decision support (43 percent). In addition to potentially reducing the cost of both data collection and analysis, outsourcing processes can verify that a standardized global approach
is applied to data acquisition, management and analytics, thus helping to avoid the dreaded ‘apples to oranges’ comparisons that may result from a fragmented patchwork of processes or analytic solutions. Using consistent data sources and standardized processes and tools helps reduce costs, builds organization capability and establishes a uniform factual base from which to make decisions.
29%
27%
27%
25%
31%
20%
25%
27%
29%
27%
51%
48%
47%
45%
43%
Planned YesNo
Application Management
Data Aggregation & Management
Report Generation & Distribution
Infrastructure Management
Advanced Analytics, Insight Generation,
and Decision Support
Figure 11: Companies Leveraging Outsourcing to Support Analytic Capability Q: Do you outsource to a third party provider the end-to-end management of activities associated with this function?
Overall
Despite centralization, more progress is needed on sharing data and using analytics consistently within and outside the company.
On the plus side, we found that many companies are using analytics with their trading allies, which can theoretically multiply impact. Nearly two in five (39 percent) are sharing with trading allies, 43 percent are integrating with them and 13 percent claim to be using a 3rd party to conduct “cleanroom” analyses on data. Yet, within a company, consistent use of analytics and sharing of data remain elusive goals. Fewer than one in ten organizations report having all of their account teams use analytics
in their decision making process, with most reporting just about a third of teams using analytics consistently (figure 12).
Companies are clearly trying to use analytics cost effectively and efficiently, and service models ranging from centralized, centralized but managed locally, and decentralized can meet those criteria. Although both can deliver benefits, companies should evaluate each to determine which is most appropriate to their business. Using an outsourcing or shared services model can free up time for CPG brand and marketing teams to focus on refining brand strategy or developing distinctive
capabilities that differentiate a company from the competition. Outsourcing analytic activities or data capabilities to a company with specialized analytic talent and industry-specific analytic services can put brand and marketing teams on the road to better shopper and market insight more quickly. When only a third of account teams use analytics, there is a lot of room to increase adoption and a shared services center or outsourcing arrangement can facilitate adoption more easily than months of retooling employee training and recruiting.
5% 4% 8% 7% 5%
21%
8%
31%
23%
33%
18%
39%
42%
36%
38%
33%
40%
27%38%
19%
23%
20%28%
8% 8% 6%15%
7% 8%
More than $5 Billion
$1 Billion to $4.9 Billion
APACEALANorth America
Overall
No account teams
Just key account teams (e.g., Walmart)
Some account teams
Most account teams
All account teams
Region Revenue
Figure 12: Inconsistent Use of Analytics Remains the Norm Q: Which account teams within your company utilize analytics tools in the decision making process?
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1410
Companies continue to invest in building analytic capability with the objective of developing differentiated insights that can provide competitive advantage before, at and after the point of purchase. Additionally, companies are making progress toward managing and deploying analytics effectively. The survey results reported here show that most CPG companies are convinced of the benefit of using analytics, but—as respondents indicated—struggle with execution.
Our key findings provide a roadmap for companies to improve execution and impact of analytics. First, there is a clear tendency to acquire too much data, which delays actual analysis. Further, because CPG companies rarely require teams or functions to integrate and leverage analytic efforts across the enterprise, most brand and marketing executives do not have a holistic view of all the relevant factors and insights that would help them make better decisions. Similarly, there is a gap between actual use of analytics and perceived benefits, which may explain why companies are not seeing the kind of revenue growth expected from their analytic investments. Finally, while most executives recognize the power and value of using predictive analytics to reach more consumers with more relevant products, targeted offers and attractive pricing, the majority of CPG companies still focus analytics
on confirming what already happened rather than predicting what market opportunities will exist and acting to exploit them (e.g., deploying predictive analytics).
‘All of these gaps can be addressed, allowing companies to capture more value. Our initial recommendations from Moving from Insight to Action still hold, and the survey results reported here lend even more support to their importance. We suggest that CPG companies:
1. Develop a cross-functional, integrated analytics vision. Cross-functional analytics generate a holistic picture of consumers and markets, and help the organization to balance competing objectives and priorities to increase overall impact for the company.
2. Prioritize analytics to create value. Focusing analytics on high-value commercial processes, specifically those related to sensing and satisfying demand across multiple channels, will drive sales and support market share growth.
3. “Operationalize” analytics throughout the enterprise. Executives need to embed analytics throughout the enterprise—in structure, processes and technology support—to improve the timeliness of insights and accountability in decision makers to take action.
Acting on these three recommendations can help companies use analytics more consistently and cost effectively. More important, it will focus companies’ analytic efforts on extracting meaningful market and shelf-level insights more frequently, thus allowing them to take value-creating actions that help drive revenue and improve consumer satisfaction and loyalty.
Conclusion
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The Moving from Insights to Action paper referenced here can be found on Accenture.com at http://www.accenture.com/us-en/Pages/insight-moving-from-insights-to-action-cpg.aspx
For more information on the survey results reported here, or to discuss Accenture’s capabilities in analytics and consumer insight, please contact:
Robert Berkey Director—Consumer Goods & Services, Commercial Analytics [email protected] +1 917 817 5923
Kenneth Dickman Executive Director, Marketing & Sales Transformation, Accenture CRM [email protected] +1 312 961 1930
Copyright © 2012 Accenture All rights reserved.
Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with more than 249,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$25.5 billion for the fiscal year ended Aug. 31, 2011. Its home page is www.accenture.com.
Shaping the Future of High Performance in Consumer Goods
Our Consumer Goods industry professionals around the world work with companies in the food, beverages, agribusiness, home and personal care, consumer health, fashion and luxury, and tobacco segments. With decades of experience working with the world’s most successful companies, we help clients manage scale and complexity, transform global operating models to effectively serve emerging and mature markets, and drive growth through evolving market conditions. We provide end-to-end managed services as well as individual consulting, technology and outsourcing offerings in the areas of Commercial Services, Speed to Customer, ERP Global Operations and Integrated Business Services. To read our proprietary industry research and insights, visit www.accenture.com/ConsumerGoods.
